Wealth Building
 

 

	Good Advice
	Up to date Ideas
	The Right Attitude
	The Right Products
	Persistence
	Patience

Good Advice

Good advice doesn't just mean you make money when the market goes up, it may mean you lose less money when the market goes down.  Good advice may mean that your advisor tells you to take your money and put it in an investment that he or she doesn't profit on.  Good advice is best found in someone who has taken the time to get a professional designation, like Certified Financial Planner™, and who is committed to his or her ongoing education.  Good advice means that your advisor really listens to you and takes the time to find out what is really important to you and your family. Good advice can be had in a number of good books out there. I recommend that you read Douglas Andrew's book "Missed Fortune 101". The ideas in this book have revolutionized my practice over the last few years.

Up to date Ideas

Keeping up with new ideas and with what is happening in the market place may not be your idea of fun but it can keep you from making mistakes and may even help you make money. One of my jobs is to stay current with both the market and things that influence the market and new ideas that may be able to help you preserve and grow your wealth. I communicate these ideas in my meetings with you and in my newsletters and seminars.

The Right Attitude

The right attitude involves not just how you think but what you think.  You must be ready to enter into a relationship where you will be sharing some of the most intimate and important information in your life.  You also must be willing to confront the fact that your current ways of thinking may be impeding your progress and then be open to being coached into new ways of thinking.  Being open does not mean being foolish. You should always question what you don't understand and ask questions whenever you are in doubt.

The Right Products

The right products for today are probably not the ones you had 10 years ago and may not even be the ones you owned 2 years ago.  It is important that your relationship with an advisor be one that is always subject to review.  The most important thing in your plan is the immediate goal you are trying to reach, not the products you use to get there.  Today, we are trending to be invested more conservatively than we did 5 years ago and we are more diversified.  If you have questions about your investments or your overall plan you should contact your advisor for a review.

Persistence

The most successful investors are those who make it a habit to save and invest. Persistence is really the ability to make investments even when it doesn't feel like a good time to do it, just because you said you would. For instance, you are a persistent investor if you put money into you 401(k) plan every pay period or if you save a regular amount each month in a savings, money market or mutual fund account. If you are persistent you will be accumulating the money needed for those goals you have.

Patience

Patience is not always easy when you see your investments go down in value, like we have saw in the first 3 years of this decade, but patience will pay off if you are prudent and persistent.  Most downturns in the market (bear markets) last an average of 12 months. There have been 10 bear markets (downturns of 20% or more) since 1956 with the shortest lasting 3 months and the longest being the market downturn from 2000 to 2003.  The Market always recovers from these declines. It may take some time for this to occur though. For example, it took eight years for the market to return to the levels it was at when it fell in January of 1973 through October of 1974.  If you have a long-term time horizon on your investments, there will be time to recover from the losses you may have suffered.  If you are a persistent investor you should do even better since you have been accumulating shares while the market has been down and have thereby lowered your cost basis in your investments. If you have a shorter time horizon, I suggest you look at products that guarantee your principle, lock in your growth and yet provide a reasonable growth rate.

The market has short ups and downs, bull and bear markets, and longer ups and downs called secular bull and bear markets. Secular markets tend to last from 8 to 15 years with smaller bull and bear markets inside them. In 2000 we ended a secular bull market that lasted almost 20 years and there are several indicators that we may now be in a secular bear market where the trend will be flat to down for a number of years.

If you do not have time to recover you should speak with your advisor about what actions you might take to ensure the growth and income you are needing from the money you have saved and invested.

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